TiVo Sees Positives, Negatives In Results

While TiVo has managed to cut its losses and show some strength in subscribers, a lack of progress in its deals with Cox and Comcast combined with declining DirecTV subscribers are putting a drag on the company.

In addition, the need for the company to begin to generate real subscriber growth will cause it to swing to a much wider loss in the holiday quarter, it admitted.

For the third quarter, TiVo saw a loss of $11.1 million on revenues of $52.6 million, an increase of 22 percent. This loss is expected to balloon to as much as $38 million this quarter. The company said deep rebates on the retail front would be to blame for the expected wider deficit.

TiVo's expected tie-ins with both Comcast and Cox have still not come to fruition, and the company provided little guidance as to the progress of those offerings. Comcast has said that trials -- not a launch -- may happen during the first half of 2007. Cox has not provided any progress reports since the initial announcement.

This has seemed to worry investors; in midday Thursday trading, TiVo stock was down 9 percent to $5.73.

Investor skittishness has not stopped TiVo from signing new deals: it announced a new agreement with Mexican cable provider Cablevision, saying moving into international markets was important to the company's overall growth.

But the deals are not impressing financial analysts, who are chastising the Alviso, Calif. DVR maker for spending a lot of money without having much return.

For example, the company only gained 16,000 subscribers in the quarter to end at 4.4 million. Over the past year, the customer base has grown 11 percent, paltry by most standards.

Much of the problem is the loss of DirecTV subscriptions; that partnership provided a large majority of new subscribers to the company. Without it, TiVo has struggled to convince consumers that paying $12.95 -- or more -- for its stand-alone service is a worthwhile investment.

Amidst such critcism, TiVo is putting on a brave face, asking its detractors to be patient. "Our strategy remains clear: to drive our standing as the only branded and truly differentiated DVR in the world," CEO Tom Rogers said.

In a conference call, Rogers also painted a brighter picture for future quarters. About half of all new customers are signing up for three-year contracts. With cable-based TiVo services getting off the ground and a dependable revenue stream, things should get better, he said.

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